Redesign of the Supply Chain of a Restaurant Franchise in the Food Industry

Abstract

This research analyzes the problem of facility location and vehicle routing for an efficient logistics system in a practical case study application. It is intended to redesign the logistics network of a franchise company in the food industry in the city of Puebla, Puebla (Mexico). First, facility location is analyzed and two scenarios are presented, installing one new distribution center, and installing two new distribution centers, by the means of the P-median model. Subsequently, a new distribution route between the depots (distribution centers) and demand points (restaurant franchises) will be proposed by means of a Capacitated Vehicle Routing Problem, to satisfy demand and operational constraints of the customer. The objective of this study is to minimize costs through a reduction in delivery times and distances. Exact facility locations are presented along with a vehicle route scheduling, followed by a cost analysis to help in the ultimate decision of the logistics network redesign.

Keywords: Facility Location, P-median, Capacitated Vehicle Routing Problem, Logistics, Distribution

JEL Classification: C6